Sunday, December 4, 2011

How does one raise finance to start a Big Company for International operations with an outlay of 50 M USD?

Have tried to raise Private Equity / Venture capital without much success so where does one get a Promoter to raise 15% of the Outlay of USD 50 Million for a medium to large Company start up.|||In the mix of things $50,000,000 isn't a large sum for the start-up of a big company. The first thing needed is a feasability study business plan. It鈥檚 a short plan that crunches numbers and shows where the money is. You'll need a lawyer and/or an accountants signature on that doc. If that plan has enough detail and reasonably projects profits and the attorney or accountant can't get you to the next step you can turn to an Angel. That鈥檚 a person with money and knowledge in the area of you planned business. Up to this point your business is in a pre start-up phase often called incubation. The attorney and accountant or the angel can help you put together a team of associates that can get things going on a full business plan. Once that plan is complete you can begin rolling out your start-up of your financing. At that point you can turn to Venture Capital if you need to but I've seen larger sums from small local private placements. The private placement cost can be funded by a portion of receipts. The down side of VC money is that they usually take the lion's share of the potential return. From both the VC and the private investment community's perspective the most important part of the business is the team involved. People are what make things happen. Once you have your first round of financing in place you can begin operation. Contrary to popular belief incorporating is not always a good idea. It adds cost to the operation. This isn't as much of an issue as it used to be since we now have limited liability companies but it should still be reviewed before a structure is adopted. Debt is another misunderstood feature. Debt acts as a lever on earnings so, if your full plan shows good earning projections debt can enlarge those earnings. Don't use business debt for the incubation phase. (If its offered the entity offering usually has bad motives.) If you are willing to risk personal bankruptcy you can use personal debt for incubation funding but its risky. Usually this funding comes from friends, family, and savings. Anyway, you'll need some money to do your feasability study and find angels. On average, in my area, it cost about $15,000 to complete a good feasability study. About 1/3 goes to lawyers, 1/3 to accountants, 1/3 for research material. I'm in Michigan and the cost here is very low compared to most places. The sba and many communities have help for people wanting to incubate a concept. Thats a place to start but don't expect those resources to take the place of the lawyer and private accountant. Should you hire both an accountant and an attorney to assist during the earliest stages you should let them both know that the attorney will be relied on in case of a conflict between the two of them. Assuming they're both well regarded the attorney's signature on the plan will open many more doors. Most investors will not even consider funding w/o a lawyer's signature. The accountants signature is an added benefit but not a go no-go issue. Well thats a bit about the most common way things go. good luck

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